By IANS
New Delhi : The Indian currency can appreciate further from around Rs.39 to a US dollar but policymakers must worry more about the country’s infrastructure, the top economist of a global commercial bank said Sunday.
“Instead of talking about it, politicians must act on it,” Gerard Lyons, chief economist and group head for global research at Standard Chartered bank, told the India Economic Summit of the World Economic Forum (WEF) here Sunday.
This apart, capital markets need to be deepened and broadened and the rupee must become fully convertible on the capital account, he told the summit, co-hosted by the Confederation of Indian Industry (CII).
The comments from Lyons come at a time when India Inc, especially its exporting community, has been complaining about the rising value of the Indian currency, which is today ruling at 10-year highs against the dollar.
Lyons said that India’s inflation levels, as projected in the official data, did not reveal reality and that it would come to haunt policymakers soon.
“Inflation is being suppressed, and it is likely to become a bigger issue in the next couple of years,” Lyons told the session on “Rupee’s Rise: Time to Worry?” on the opening day of the three-day summit.
He said inflation was a “brewing problem” driven by liquidity and rising global crude oil prices and that the Reserve Bank of India (RBI) would have to do more to suppress this in the coming years.
“The good is the economic outlook, the bad is the inflation prospect, and the ugly is the currency issue.”
Lyons said with intra-Asian trade booming, India had the potential to influence South Asia economically in the way that China has influenced East Asia.
“Today, with one-fifth of the world’s population, but one-fiftieth of the world’s gross domestic product and one-hundredth of the world’s trade, India has tremendous opportunity to become a political and economic leader in the region,” he said.
“We’re at a moment of great global disorder,” said Suman Bery, director-General of the New Delhi-based think tank, the National Council of Applied Economic Research (NCAER).
“The anchor currency of the world, the dollar, is swooning due to mismanagement of the US economy,” he added.